2014/15 Annual Results

May 21, 2015

2

This presentation contains “forward-looking statements” which are statements that refer to expectations and plans for the future and include, without limitation, statements regarding Lenovo’s future results of operations, financial condition or business prospects as well as other statements based on projections, estimates and assumptions. In some cases, these statements can be identified by terms such as "expect," "intend," "plan," "believe," "estimate," "may," "will," "should" and comparable words (including the negative of such words). These forward-looking statements, reflect the current expectations and plans of the directors and management of Lenovo, which may not materialize or may change. Many risks, uncertainties and other factors, some of which are unpredictable and beyond Lenovo’s control, could affect the matters discussed in these forward-looking statements. These factors include, without limitation, economic and business conditions globally and in the countries where we operate, Lenovo’s ability to predict and respond quickly to market developments, consumer demand, pricing trends and competition; changes in applicable laws and regulations (including applicable tax and tariff rates). Any variance from the expectations or plans on which these forward-looking statements are based could cause Lenovo’s actual results or actions to differ materially from those expressed or implied in these statements. These forward-looking statements are not guarantees of future performance and you are cautioned not to place undue reliance on these statements. Lenovo undertakes no obligation to update any forward-looking statements in this presentation, whether as a result of new information or any subsequent change, development or event. All forward-looking statements in this presentation are qualified by reference to this paragraph.

Forward Looking Statement

Yuanqing Yang

Chairman and CEO

@Yuanqing_Lenovo

4

�Revenue up 21% YTY, up 28% excluding exchange rate impact

�PTI was $198M* before M&A charges, -7% YTY

�Net Income was $194M* before M&A charges, up 23% YTY

Strong Fourth Quarter

*Before non-cash M&A related accounting charges

198198

Adjusted PTI

Adjusted Net Inc

5

� PC: #1 for 8 straight quarters; Improved PTI margin by 1 point YTY� Mobile

� SP share up 1.2 points YTY，Motorola volume grew 23.6% YTY� Rapid global SP growth; 56% of volume outside China � Tablets gained 1.3 points share YTY� Now #3 in both smartphones and tablets

� EBG: ThinkServer revenue grew 41% YTY, System x revenue decline narrowed, operational margin improved 4.2 points YTY to 2.7%

� Ecosystem: 70M monthly active users

Strong Fourth Quarter

19.117.6

19.5

5

10

15

20

Q113/14

Q213/14

Q313/14

Q413/14

Q114/15

Q214/15

Q314/15

Q414/15

HP Lenovo Dell Acer ASUS

WW Smartphone Market Share (%) WW Tablet Market Share (%)WW PC Market Share (%) 35

30

25

20

15

4

5

6

7

Q4 1415

Q3 1415

Q2 1415

Q1 1415

Q413/14

Q313/14

Q213/14

Q113/14

LG HuaweiLenovo AppleSamsung

30

25

20

15

35

0

2

4

6

8

Q4 1415

Q3 1415

Q2 1415

Q1 1415

Q413/14

Q313/14

Q213/14

Q113/14

LG ASUSLenovo AppleSamsung

5.6 5.4

Source: IDC

62015 Lenovo Internal. All rights reserved.

Record Fiscal Year

•Record revenue:– $46.3B, up 20% YTY

•Record PTI before M&A charges:

– $1.139B*, up 12% YTY

•Record net income before M&A charges:

– $997M*, up 22% YTY

16.6

21.6

29.6

33.9

38.7

46.3

176

358

582

801

1,014

971

1139

129

273

473

635

817 829

997

FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 FY14/15

REV

PTI

Adjusted PTI

Net Income

Adjusted Net Income

Revenue ($B), PTI and Net Income ($M)

*Before non-cash M&A related accounting charges

Source: Internal Data

7

Strong Performance Across All Product Lines

• PC: Reached all-time high market share of 19.7%, grew at 11-point premium to market

• Mobile:– Smartphone: Record volume of 76M

– Tablet: Gained 1 point of share YTY, outgrew market by more than 24 points

• Enterprise: – ThinkServer revenue grew 49% YTY

– System x: Revenue stabilizing gradually, profit improved

• ECS: Record 400M users, up 300% YTY with $167M in revenue

82015 Lenovo Internal. All rights reserved.

Overachieved profitability commitment for Legacy business

•Commitment 3 years ago: Improve legacy business operational margin by 1 pt

•Overachieved from 2% in FY11/12 to 3.2% in FY14/15

Source: Internal Data

2.0%

2.4%2.6%

3.2%

0.0%

2.0%

4.0%

FY 11/12 FY 12/13 FY 13/14 FY14/15

Operational Margin for Legacy Lenovo

9

Innovative Products

Clear Strategy Operational Excellence

Diverse Global Team

2015 Lenovo Internal. All rights reserved.

OUR FORMULA FOR SUCCESS

10

Integrations on Track

•Confident in strategic direction, while building a foundation for future

•Confident build a $5B Enterprise business with stronger profit 1 year after closing

•Remain firm on turning Motorola around in 4-6 quarters after closing

11

More Balanced Business

•Balanced growth and acquisitions make Lenovo more diverse

• In Products:‒PC: 82% to 64% of revenue from first to

second half of FY

‒Mobile 25%, Enterprise 9% of revenue

• In Geographies:‒China 32%

‒EMEA 28%

‒Americas 26%

‒AP 14%

64%25%

9% 2%

2H 14/15 with acquisitions by Product Group

PC Mobile Enterprise Others

32%

26%

28%

14%FY 14/15 by GEO

China Americas EMEA AP

12

Protect and Attack• PC: Fully leverage industry consolidation, innovation, our scale and efficiency to grow share,

protect profit pool

• Enterprise: Leverage synergies to fund growth

• Smartphones: Grow with dual brand strategy

• Tablets: Drive sales globally by leading in innovation

• Ecosystem: Expand active users, provide great applications and user experience

13

Organization Aligned to Strategy

2015 Lenovo Confidential. All rights reserved

Mobile Business

Group

Ecosystem & Cloud Services

Enterprise Business

Group

• Mobile, ECS, IoT interrelated• Untapped growth potential

MBG, ECS and IoT

• Synergies in R&D, supply chain, procurement• Opportunities in channels and customer base

PCG/EBG

PCBusiness

Group

•Ensures better focus‒Combined PC and Enterprise under Gianfranco Lanci, President and COO

‒Mobile, ECS, IoT interrelated, Yuanqing Yang focused more on these areas

14

Transform from making hardware

to making hardware, software and cloud

services

New Mission as Customer-Centric Company

Transform from one-time purchase model to multiple

touch-points model

Wong Wai Ming

Chief Financial Officer

17

FY15 Financial Highlights

• Group revenue of US$46.3B, up 20% YTY, includes two quarters of System X and 5 months of

Motorola performances

• Group PTI before non-cash M&A-related accounting charges was US$1,139M, up 12% YTY

• Non-cash M&A-related accounting charges, such as intangible asset amortization, imputed interest

expense of promissory notes and others were US$168M

• Group PTI of US$971M and Group Net Income of US$829M

• Group Net Income before non-cash M&A related accounting charges was US$997M, up 22% YTY

• On continuous track to profitability improvement commitment

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Financial Summary

US$ MillionFY2014/15 Y/Y% Q4 FY2014/15 Q4 FY2013/14 Y/Y% Q/Q%

Revenue 46,296 20% 11,334 9,357 21% -20%

Gross Profit 6,682 32% 1,779 1,244 43% -15%

Operating Expenses (5,574) 39% (1,652) (1,013) 63% -7%

Operating Profit 1,108 5% 127 231 -45% -61%

Other Non-Operating Expenses – net (137) 263% (23) (19) 20% -54%

Pre-tax Income 971 -4% 104 212 -51% -62%

Taxation (134) -32% (7) (44) -85% -61%

Profit for the year/period 837 2% 97 168 -42% -62%

Non-controlling interests (8) 3160% 3 (10) NA NA

Profit attributable to Equity Holders 829 1% 100 158 -37% -61%

EPS (US cents)

- Basic 7.77 (0.11) 0.91 1.53 (0.62) (1.41)

- Diluted 7.69 (0.09) 0.90 1.51 (0.61) (1.40)

Dividend per share (HK cents) 26.50 2.50

FY2014/15 FY2013/14 Q4 FY2014/15 Q4 FY2013/14 Q3 FY2014/15

Gross margin 14.4% 13.1% 15.7% 13.3% 14.9%

E/R ratio 12.0% 10.4% 14.6% 10.8% 12.6%

Operating margin 2.4% 2.7% 1.1% 2.5% 2.3%

PTI margin 2.1% 2.6% 0.9% 2.3% 1.9%

Net margin attributable to Equity Holders 1.8% 2.1% 0.9% 1.7% 1.8%

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Summary : Accounting Operating Profit Vs “PTI before non-cash M&A related accounting charges”

FY14/15 FY13/14 Change (YTY)

Accounting Operating Profit (As-Reported) 1,108 1,052 +5%

- Other Non-Operating Expenses -137 -38 +263%

Pre-tax Income (As-Reported) 971 1,014 -4%

+ Non-Cash M&A Related Accounting Charges 168 - NA

PTI Before Non-Cash M&A Related Accounting Charges 1,139 1,014 +12%

- Tax -134 -197 -32%

- Non-Controlling Interests -8 - +3160%

- Non-Cash M&A Related Accounting Charges -168 - NA

Net Income (As-Reported) 829 817 1%

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Condensed Balance SheetUS$ Million As at As at

Mar 31, 2015 Mar 31, 2014

Non-current assets 11,653 4,957Property, plant and equipment 1,496 667

Intangible assets 8,930 3,340

Others 1,227 950

Current assets 15,428 13,400

Bank deposits and cash 3,026 3,953

Trade, notes and other receivables 9,085 6,620 Inventories 2,995 2,701 Others 322 126

Current liabilities 17,161 13,462

Short-term bank loans 1,168 445

Trade, notes, other payables and provisions 15,103 12,370

Others 890 647

Net current liabilities 1,733 62

Non-current liabilities 5,814 1,870

Total equity 4,106 3,025

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Cash and Working Capital

US$ Million FY2014/15 FY2013/14

Bank deposits and cash 3,026 3,953

Total Bank Borrowings 3,054 455

Net (Debt) / Cash Reserves (28) 3,498

Net cash generated from / (used in) operating activities 238 1,432

Days Inventory 29 28

Days Receivable 35 35

Days Payable 66 65

Cash Conversion Cycle -2 days -2 days

Q4 FY2014/15 Q4 FY2013/14

3,026 3,953

3,054 455

(28) 3,498

(1,102) 469

32 32

44 37

73 73

3 days -4 days

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FY15 Performance by Business Group

Revenue Segment Pretax Income Segment Pretax IncomeUS$ Million US$ Million Margin

FY15 Y/Y FY15* FY14 FY15* FY14

PC 33,346 1,713 1,771 1,175 5.3% 3.7%

Mobile 9,142 3,788 (370) (57) -4.0% -1.1%

Enterprise 2,628 2,123 (121) (68) -4.6% -13.5%

PC• PC shipments up 8.4% vs. market -2.8% • WW share at 19.7%, up 2.0pts YTY• Record share across GEOs, with strong performance in WE

(+50% YTY) and MEA (+42% YTY)• Profit growth with share gains in all geos, despite challenges in

Brazil• PC revenue up 5% YTY

Enterprise• Strong growth of Think Server business

• ThinkServer revenue grew 49% YTY, System X continued to stabilize

• Enterprise revenue up 4.2x YTY

Mobile• Sold record 76M units, including 2-qtr of Motorola, up over 51.8%• WW market share up 1.0pts YTY to 5.7% • Record tablet shipments of 12M, up 26%, market share 5.1%, +1.0pt

Y/Y; with strong growth overseas• Mobile Revenue up 71% YTY to US$9.1B (with 5 months’ of Motorola)

* Included non-cash M&A-related accounting charges, such as intangible asset amortization, imputed interest expense of promissory notes and others

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FY15 Performance by GeographyChina• Protected profit pool and China overall margin stayed flat at 5.4%• PC: Market share continued to improve by 1.5pts to 36.6%, with

stable margin• Mobile: Transformation plan in place with aggressive expansion

in internet model including ShenQi to sharpen competiveness • Enterprise: Leadership position with healthy shipments growth

AP• Record high operating margin at 4.6%, up 2.8pts YTY• PC: Market share at 15.7%, up 0.9pt YTY• Mobile: Strong smartphone shipments growth (+1.1x) driven by

Moto• Enterprise: Leveraging Lenovo channel expertise and

ecosystems to accelerate the business

EMEA• Operating margin at 3.2%, up 1.2pts YTY; Revenue grew 34% YTY• PC: Market share of 19.4%; up 4.5 pts YTY, driven by North & South• Mobile: Strong smartphone shipments growth (+3.4x) driven by

strong growth by both Lenovo and Motorola• Enterprise: Attacking into Europe Enterprise segment

AG (Americas)• Revenue grew 49% YTY• PC: Market share at 11.7%, up 0.9pts YTY; Strong shipments growth

for NA and LAS • Mobile: Strong smartphone shipments growth combining Motorola• Enterprise: Preparing to attack and capture more enterprise

customers in future• Continued actions to stabilize business in Brazil

Revenue Segment Pretax Income Segment Pretax IncomeUS$ Million US$ Million Margin

FY15 Y/Y FY15 FY14 FY15 FY14

China 14,700 (26) 795 788 5.4% 5.4%

AP 6,550 387 302 109 4.6% 1.8%

EMEA 12,803 3,223 411 187 3.2% 2.0%

AG 12,243 4,005 8 69 0.1% 0.8%

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Appendix

- Summary : Accounting Operating Profit Vs “PTI before non-cash M&A related accounting charges”Performance by Geography – Q4 FY15

- Performance by Business Group – Q4 FY15- Performance by Geography – Q4 FY15- Consolidated Income Statement- Condensed Consolidated Cash Flow Statement

25

Summary : Accounting Operating Profit Vs “PTI before non-cash M&A related accounting charges”

FY14/15 Q4 FY13/14 Q4 Change (YTY)

Accounting Operating Profit (As-Reported) 127 231 -45%

- Other Non-Operating Expenses -23 -19 +20%

Pre-tax Income (As-Reported) 104 212 -51%

+ Non-Cash M&A Related Accounting Charges 94 - NA

PTI Before Non-Cash M&A Related Accounting Charges 198 212 -7%

- Tax -7 -44 -85%

- Non-Controlling Interests 3 -10 NA

- Non-Cash M&A Related Accounting Charges -94 - NA

Net Income (As-Reported) 100 158 -37%

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Q4FY15 Performance By Business Group

Revenue Segment Pretax Income Segment Pretax IncomeUS$ Million US$ Million Margin

Q4FY15

Y/Y Q/QQ4*

FY15Q4

FY14Q3*

FY15Q4*

FY15Q4

FY14Q3*

FY15

PC 7,160 (633) (1,987) 391 351 494 5.5% 4.5% 5.4%

Mobile 2,845 1,698 (545) (218) (43) (89) -7.7% -3.7% -2.6%

Enterprise 1,066 942 (156) (45) (29) (42) -4.2% -23.4% -3.4%

PC• PC shipments up 2.7% vs. market -7.0% • WW share at 19.5%, up 1.8pts YTY• Share gains across the board with strong performance in India

(+42% YTY) and LAS (+22% YTY) and ASEAN (+12% YTY) • PC PTI at US$391M with margin at 5.5%, +1.0pt YTY

Enterprise• Strong growth of Think Server business

• ThinkServer revenue grew 41% YTY, System X continued to stabilize (-5% YTY)

• Enterprise revenue up 7.6x YTY

Mobile• WW #3 SP player, share up 1.2pts YTY to 5.6%• Smartphones shipments grew strongly by 49% to 18.7M• Motorola shipped 7.9M (+23.6% YTY)• Tablet maintained WW #3, shipments grew 22% to 2.5M, share up 1.3pts

to 5.4%• Mobile Revenue up 1.5x YTY

* Included non-cash M&A-related accounting charges, such as intangible asset amortization, imputed interest expense of promissory notes and others

27

Q4FY15 Performance by Geography

Revenue Segment Pretax Income Segment Pretax IncomeUS$ Million US$ Million Margin

Q4FY15

Y/Y Q/QQ4

FY15Q4

FY14Q3

FY15Q4

FY15Q4

FY14Q3

FY15

China 3,071 (31) (1,012) 134 170 234 4.4% 5.5% 5.7%

AP 1,692 (44) (27) 77 47 92 4.6% 2.7% 5.4%

EMEA 2,966 391 (1,072) 80 75 122 2.7% 2.9% 3.0%

AG 3,605 1,662 (647) (9) 13 (22) -0.2% 0.7% -0.5%

China• OP margin down 1.1pts to 4.4% due to China smartphone business• PC: Share up 0.9pts to 33.6%, stable margin• Mobile: transformation plan in place with aggressive expansion in

internet model including ShenQi to sharpen competiveness;• Enterprise: healthy shipments growth

AP• Strong operating margin at 4.6%, up 1.9pts YTY driven by strong

PC profitability• PC: Market share at 15.7%, up 0.2pts YTY driven by ASEAN &

India• Mobile: Strong smartphone shipments growth (+40%) driven by

Moto• Enterprise: Leveraging Lenovo channel expertise and ecosystems

to accelerate the business

EMEA• Operating margin at 2.7%, down 0.2pts YTY; Revenue grew 15% YTY• PC: Record share surpassing 20% level at 20.5%; up 4.8pts YTY,

driven by North & South• Mobile: Strong smartphone shipments growth (+2.4x) driven by strong

growth by both Lenovo and Motorola• Enterprise: Attacking into Europe Enterprise segment

AG (Americas)• Revenue grew 85% YTY• PC: Share up 0.6pts YTY to 11.9%; Strong shipments growth of LAS

(+22% YTY) • Mobile: Strong smartphone shipments growth combining Motorola• Enterprise: Preparing to attack and capture more enterprise customers

in future• Continued actions to stabilize business in Brazil

28

Consolidated Income StatementUS$ Million FY2014/15 FY2013/14 Q4 FY2014/15 Q4 FY2013/14

Revenue 46,296 38,707 11,334 9,357

Cost of sales (39,614) (33,643) (9,555) (8,113)

Gross profit 6,682 5,064 1,779 1,244

Other income, net 1 23 -

Selling and distribution expenses (2,303) (1,900) (658) (457)

Administrative expenses (1,883) (1,403) (546) (399)

Research and development expenses (1,220) (733) (424) (186)

Other operating (expense)/income – net (169) 1 (24) 29

Operating profit 1,108 1,052 127 231

Finance income 31 34 7 9

Finance costs (185) (81) (52) (27)

Share of gains of associated companies 17 9 22 (1)

Profit before taxation 971 1,014 104 212

Taxation (134) (197) (7) (44)

Profit for the period 837 817 97 168

Profit/(losses) attributable to:

Equity holders of the company 829 817 100 158

Non-controlling interests 8 - (3) 10

Dividend 380 322 - -

Earnings per share attributable to equity holders of the Company (US cents)

- Basic 7.77 7.88 0.91 1.53

- Diluted 7.69 7.78 0.90 1.51

29

Condensed Consolidated Cash Flow Statement

US$ Million FY14/15 FY13/14 Q4 FY14/15 Q4 FY13/14

Net cash generated from/(used in) operating activities 238 1,432 (1,102) 469

Net cash used in investing activities (3,282) (584) (237) (253)

Net cash generated from/(used in) financing activities 2,143 (430) 333 (49)

(Decrease)/increase in cash and cash equivalents (901) 418 (1,006) 167

Effect of foreign exchange rate changes (102) (14) (20) (34)

Cash and cash equivalents at the beginning of the period 3,858 3,454 3,881 3,725

Cash and cash equivalents at the end of the period 2,855 3,858 2,855 3,858

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